Category Archives: Capitalism

At a time when apprehensions about low-quality food entering the country post Brexit are rising,the Timesreports that Michael Gove, the environment secretary has announced that “Britain will lead an agricultural revolution with the use of gene editing”.

In July, after hearing scientific evidence that gene editing “causes many profound mutations and DNA damage”, the European Court of Justice ruled that food resulting from genome editing would be regarded as genetically modified, which is outlawed in Europe.

The Country Land and Business Association (CLA) is underwhelmed

Disregarding this science-based evidence, Gove pledged, at yesterday’s CLA meeting in Westminster, that scientists and farmers would be freed from this European court ruling. The first report seen however, makes no reference to this exciting prospect, whatsoever.

Genome editing, or genome engineering is a type of genetic engineering in which DNA is inserted, deleted, modified or replaced in a specific location in the genome (genetic material) of a living organism, unlike early genetic engineering techniques that randomly insert genetic material into a host genome.

Support from vested interests

Scientists in the industry, like the Biotechnology and Biological Sciences Research Council, funded by the government’s Department of Business believe that the technique will lead to crops and animals with higher yields, resistance to disease and the ability to cope with the effects of climate change.

Emma Hockridge, head of policy at the Soil Association, urged the government to keep the UK aligned with the European court: “Scientific research has long shown that these new gene-editing technologies give rise to similar uncertainties and risks as GM always has. We have always been clear that these new plant breeding techniques are GMOs [genetically modified organisms] and therefore are banned in organic farming and food”.

Bloombergreports that under the Trump administration,gene-edited foods don’t need to be labelled or regulated and that Zach Luttrell, a principal at industry consultant StraightRow LLC, sees gene-editing as a way to continue lowering costs.

Nationally and internationally eminent researchers and commentators are focusing on the damage done to damage the environment and human health by agriculture (example).

This, in a country whose manufacturing industry was the first to pollute its air, water and soil and whose armaments industry continues the process (seea recent studyof pollution caused by war activity, during development and testing of hardware, weapon systems and procedures, war operations and subsequent reconstruction).

A country which could and should provide its own staple food is becoming increasingly dependent on imports because their family farmers have been grossly underpaid for many years by middlemen and large retailers. According to the NFU (2015), the number of dairy farmers in England and Wales has halved since 2002 – cause and effect.

As family farmers leave in droves each year we must assume that the country’s environment and human health will improve by leaps and bounds. Not so, their land will be bought by those largescale investors who have reaped the benefit of EU subsidies for so many years.

William Taylor and other leaders of Northern Ireland’s farming organisations have beenactively lobbying politiciansfrom all parties and none. Their August press release ended:

Farming families traditionally were charity givers, now 25%+ are living below the poverty line, therefore, denoting complete current Government policy failure. FFA therefore call on the Westminster Government to implement legislation on farm gate prices which would return farmers a minimum of the cost of production plus a margin inflation linked forthwith across the staples throughout the UK to force fairness into the food chain for farmers immediately.

There is now proof from University College Dublin that in the farming industry every new job on a farm would create 4 down the line and whilst farming is not viewed by Westminster as the biggest UK industry in money terms (partly the fault of the food corporates) it is the largest UK industry by tonnage handled, 60%+ of all commercial road vehicles haul food or food related products to give but one example.

If legislation on farm gate prices is not forthcoming from Westminster, such as that being sought at Stormont when it re-sits to sort the UK’s farm gate price crisis, then it will confirm what we all suspect, the large food retailers are out of control with their influence in ‘Democratic’ Westminster, the limited powers of the supermarket Ombudsman’s Office a case in point!

For years Stroud District Councilhas been led by a cooperative alliance of the Labour, Green and Liberal Democrat parties – a ‘rainbow alliance’ (below).

Last May. Gloucestershire County Council’s agenda and minutes post recorded that Cllr Lesley Williams and Cllr Rachel Smith advised that the Labour and Green members had formed a political group called the Labour and Green Cooperative Alliance. They explained that under the arrangement the Labour and Green members would work cooperatively but would continue to look at issues on an individual basis.

Professor John Curtice summarised the electoral maths: almost half the nation voted for broadly progressive parties in 2015 (49% backed Labour, the LibDems, Greens, SNP or Plaid Cymru, while 51% chose the Tories or Ukip). He considers the impact of a coalition with even one ‘minor party’.

Labour MP Clive Lewis and Green MP Caroline Lucas noted that in the 2017 general election more than 40 local alliances were formed, where almost exclusively Greens put the national interest before that of their party.

It had a huge impact on the vote – more than doubling the average swing away from the Tories.

They pointed out the challenges we face:

markets that are too free

a state that can be too remote,

a democracy that still leaves so many voices unheard

and climate change on a scale our people and our planet simply can’t cope with.

Continuing: “It will take a politics that is social, liberal and green to overcome these challenges. No single party or movement has all the answers. We are going to have to learn to cooperate as well as compete to build the society of which we dream. And we are going to have to recognise that the future is not a two-party system but one in which smaller parties grow – both in influence and in their electoral representation”.

They point out that the millions of young people who voted live in a world of social media in which their identities and allegiances are permanently in flux. They like and they share. They flock to one idea, group or party and then another. A politics that is purposeful but also responsive, open and collaborative is needed.

Then, as now, Westminster tribalism won. Machismo required Labour “to contest every seat in the land”. That is apparently more important than denying the Tories a strong majority – let alone winning elections.

MPs Lewis and Lucas end:

“We are from different parties and different political traditions – and we celebrate that because, while we share so much, we can learn much more from each other. If we work together there is nothing progressives can’t achieve.

“The limits of the old politics are there for everyone to see – the limitlessness of the new we are just starting to explore.

–

Information sought:

People on the mailing list of this website are drawn from many areas of Britain and visitors come from several countries (opposite: eleven in May), the overwhelming majority from America.

British readers, expats and other well-informed readers are asked to send, via comments, any other examples of an effective co-operative alliance within councils and parliaments.

George Monbiot recently pointed out that the Commons report on the Carillion fiasco is one of the most damning assessments of corporate behaviour parliament has ever published. It trounces the company’s executives and board and laments the weakness of the regulators.

But, as Prem Sikka said in his April article, it scarcely touches the structural causes that make gluttony a perennial feature of corporate life.

Both agree that the problem begins with an issue the report does not once mention: the extreme nature of limited liability. Sikka points out that this system, under which executives are only financially accountable for the value of their investment, has also benefited frauds and led to the self-enrichment of executives at the expense of workers, consumers, creditors, pensioners and citizens.

Monbiot adds that the current model of limited liability allowed the directors and executives of Carillion to rack up a pension deficit of £2.6 billion, leaving the 27,000 members of its schemes to be rescued by the state fund (which is financed by a levy on your pension – if you have one). The owners of the company were permitted to walk away from the £2 billion owed to its suppliers and subcontractors. (Left: the former Carillion chief executive Keith Cochrane in Westminster after appearing before the Commons work and pensions select committee)

Monbiot continues: “There is no way that fossil fuel companies could pay for the climate breakdown they cause. There is no way that car companies could meet the health costs of air pollution. Their business models rely on dumping their costs on other people. Were they not protected by the extreme form of limited liability that prevails today, they would be obliged to switch to clean technologies”.

So what is to be done?

Prem Sikka (right) proposes that the bearers of unlimited risks and liabilities should be given rights to control the day-to-day governance and direction of companies.

He advocates including employees and citizen/consumers on company boards – because both ultimately have to bear the financial, health, social and psychological costs associated with environmental damage, pollution, poor products, industrial accidents, loss of jobs, pensions and savings. Through seats on company boards, they could secure a fairer distribution of income, challenge discrimination, curb asset-stripping and influence investment, training and innovation.

Across the 28 European Union countries (plus Norway), most have a statutory requirement for employee representation on company boards – unlike the UK, Belgium, Bulgaria, Cyprus, Estonia, Italy, Latvia, Malta and Romania.

George Monbiot proposes a radical reassessment of limited liability.

He points out that a recent paper by the US law professor Michael Simkovic proposes that companies should pay a fee for this indemnity, calibrated to the level of risk they impose on society. He adds, significantly, that as numerous leaks show, companies tend to be far more aware of the risks they inflict than either governments or the rest of society. Various estimates put the cost that businesses dump on society at somewhere between 4% and 20% of GDP

His own ‘tentative’ and ingenious proposal is that any manager earning more than a certain amount – say £200,000 – would have half their total remuneration placed in an escrow account, which is controlled not by the company but by an external agency. The deferred half of their income would not become payable until the agency judged that the company had met the targets it set on pension provision, workers’ pay, the treatment of suppliers and contractors and wider social and environmental performance. This judgement should draw on mandatory social and environmental reporting, assessed by independent auditors.

If they miss their targets, the executives would lose part or all of the deferred sum. In other words, they would pay for any disasters they impose on others. To ensure it isn’t captured by corporate interests, the agency would be funded by the income it confiscates.

Monbiot then says “I know that, at best, they address only part of the problem” and asks, “Are these the right solutions?

support them,

oppose them

or suggest better ideas.

He ends: “Should corporations in their current form exist at all? Is capitalism compatible with life on earth?”

Professor Prem Sikka, Professor of Accounting at University of Sheffield and Emeritus Professor of Accounting at University of Essex, draws attention to the case of the UK telecoms giant Lycamobile, the biggest donor to the Conservative Party, which has accepted £2.2m in donations since 2011.

Her Majesty’s Revenue and Customs (HMRC) has refused to assist the French authorities and raid Lycamobile’s UK premises in order to investigate suspected money laundering and tax fraud.

Economia, the publication for members of the Institute of Chartered Accountants in England and Wales (ICAEW) which covers news and analysis on the essential issues in business, finance and accountancy, reports:

Following an initial denial (left, Financial Times), Economia confirmed that in an official response to the French government dated 30 March 2017, a HMRC official noted that Lycamobile is “a large multinational company” with “vast assets at their disposal” and would be “extremely unlikely to agree to having their premises searched”, said the report.

The letter from HMRC to the French government added, “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May and donated 1.25m Euros to the Prince Charles Trust in 2012”.

This is an ongoing saga: in 2016 Economia noted: “The Tories have come under fire for continuing to accept donations of more than £870,000 from Lycamobile since December, while it was being investigated for tax fraud and money laundering”.

HMRC: “has become a state within a state”.

Prem Sikka (right) continues, “The House of Commons Treasury Committee is demanding answers to the Lycamobile episode – but HMRC is unlikely to prove amenable”.

In recent years, the Public Accounts Committee has conducted hearings into tax avoidance by giant global corporations such as Microsoft, Amazon, Google, Starbucks, Shire and others. The hearings have not been followed by HMRC test cases.

The Public Accounts Committee has also held hearings into therole of the large accountancy firmsin designing and marketing avoidance schemes and exposed their predatory culture. In a telling rebuke to PricewaterhouseCoopers, the Committee chair said: “You are offering schemes to your clients—knowingly marketing these schemes—where you have judged there is a 75% risk of it then being deemed unlawful. That is a shocking finding for me to be told by one of your tax officials.”

Despite the above and numerous court judgments declaring the tax avoidance schemes marketed by accountancy firms to be unlawful, not a single firm has been investigated, fined or prosecuted.

There are real concerns that HMRC is too sympathetic to large companies and wealthy elites.

A major reason for that is the ‘revolving door’, the colonisation of HMRC by big business and its discourses: its current board members include non-executive directors connected with British Airways, Mondi, Anglo American, Aviva, PricewaterhouseCoopers and Rolls Royce.

After a stint at HMRC many of the non-execs return to big business. Corporate sympathies are therefore not counterbalanced by the presence of ordinary taxpayers or individuals from SMEs and civil society.

Sikka ends: “In such an environment, it is all too easy to turn a Nelsonian eye on corporate abuses and shower concessions on companies and wealthy individuals”. Read more here.

Why should we care?

Because tax revenue pays for the services used by all except the richest, the education health, transport and social services, increasingly impoverished by funding cuts imposed by the last two British governments.

The Shadow Chancellor has twice called for more rigorous examination and tightening of processes at HMRC to ensure that corporations and wealthy individuals are free from political corruption and pay fair rates of taxes.

Professor Luis Suarez-Villa (Social Ecology and of Planning, Policy and Design at the University of California, Irvine) wrote in the FT recently:

American democracy was hijacked long ago by money and powerful interests, turning it into what amounts to a system of legalised corruption.

Lobbying, political action committees (super-pacs), myriad forms of campaign contributions and patronage are at the core of this phenomenon.

By comparison, the so-called Russian meddling in the 2016 election seems amateurish at best, and perhaps (more seriously) a way for the political establishment to divert the attention of the American people from the real problems of a corrupt system of public governance, whose patrons and beneficiaries want the rest of the world to think it is democratic.

A review of his book Corporate Power, Oligopolies, and the Crisis of the State (2015) expands his argument:

“The largest, wealthiest corporations have gained unprecedented power and influence in contemporary life.

“From cradle to grave the decisions made by these entities have an enormous impact on how we live and work, what we eat, our physical and psychological health, what we know or believe, whom we elect, and how we deal with one another and with the natural world around us.

“At the same time, government seems ever more subservient to the power of these oligopolies, providing numerous forms of corporate welfare—tax breaks, subsidies, guarantees, and bailouts—while neglecting the most basic needs of the population.

“In Corporate Power, Oligopolies, and the Crisis of the State, Luis Suarez-Villa employs a multidisciplinary perspective to provide unprecedented documentation of a growing crisis of governance, marked by a massive transfer of risk from the private sector to the state, skyrocketing debt, great inequality and economic insecurity, along with an alignment of the interests of politicians and a new, minuscule but immensely wealthy and influential corporate elite.

“Thanks to this dysfunctional environment, Suarez-Villa argues, stagnation and a vanishing public trust have become the hallmarks of our time”.

His charges apply just as accurately to the British scene: British democracy has also been hijacked by money and powerful interests, turning it into what amounts to a system of legalised corruption.

–

Emeritus Professor Luis Suarez-Villa is the author of several other books, including Globalization and Technocapitalism: The Political Economy of Corporate Power and Technological Domination and Technocapitalism: A Critical Perspective on Technological Innovation and Corporatism.

Major banks and credit insurers are calling on the government to ‘step in’, as Carillion’s debts soar and ‘huge write-downs’ are announced on the value of several old contracts.

Some – according to the Financial Times – are seeking a taxpayer guarantee for the company’s debt and assurances that Carillion will be allowed to compete for future contracts, despite the company’s troubled state. Oliver Dowden, newly promoted to the frontbench, says that the government is making contingency plans for Carillion folding.

If Carillion goes under, writes MP Jon Trickett, “We would effectively be paying for these services twice. This government has socialised the risk but privatised years’ worth of profit for shareholders . . . it is allowing firms with public contracts to pay millions to private shareholders as the public suffers from cuts to disability benefits, schools and the NHS”. He adds:

“They are in debt to the tune of £1.5bn, while being valued at less than £100m and are being investigated by the Financial Conduct Authority over financial statements issued in the run-up to July’s profit warning . . .and if they fold, Britain could face a huge bailout so that our schools, hospitals and train lines keep running”.

Will the 99% bail Carillion out?

The government now relies on this contractor for a wide range of services. The Financial Times lists Carillion’s major contracts in the transport, defence/security and health sectors and points out that Labour’s Shadow Business Secretary has asked why ministers continued to sign off major contracts with the company even after it issued a profit warning in July 2017.

Theresa May’s new Cabinet ministers have – nevertheless – confirmed that they still intend to continue with the privatisation and outsourcing of public services to private firms which then make a profit at the expense of the taxpayer.

Some politicians and party members have, through directorships, shareholdings or the employment of family and friends, a vested interest in these companies, many of which donate to Conservative party funds, hoping to ensure another Conservative government.

MP Jon Trickett, shadow minister for the cabinet office, whose principled political life is outlined here, presents the view of ‘Corbyn Labour’, that taxpayer-funded services should be conducted in an ethos of public service rather than for private advantage: “Whether that’s to run welfare payments to those receiving universal credit, running hospitals or administrating schools in huge academy chains . . . “

He points out that when these firms cannot make good on their obligations under these contracts the British public picks up the bill, citing the termination of Virgin’s contracts on the East Coast main line.

The MP adds: “I represent a former mining area, which hasn’t seen meaningful private investment in decades, and little public investment since the 2010 election. Some of the poorest people in the country, with some of the worst prospects due to years of Tory government, live there. They have seen private firms make profit out of their benefits, their schools and crisis-stricken NHS services”. He ends by giving an assurance:

“Labour would reverse the presumption in favour of outsourcing and provide more cost-effective services, treating workers better by running many services in-house”.

“Is it a ‘success’ having thousands of elderly, immobile people in care or nursing homes, with Parkinson’s or Alzheimer’s, post-stroke or myocardial infarction; blind from macular degeneration or deaf; incontinent and catheterised, unable to tend or feed themselves but living out some form of existence? I rather doubt it from a quality of life point of view, not to mention the strain it places on health and social care resources”.

Bronwen Maddox, director of the Institute for Government and formerly an investment analyst in the City and on Wall Street, focusses on the argument that ‘we’ are about to see “the end of inheritance”, stating that the assets of the British middle-class will have to be spent on their own care in their later years.

Ms Maddox adds that some MPs are suggesting that government try to encourage people to see the equity in their homes as a resource while prompting the financial services industry to develop cheaper, more flexible products for extracting it.

Some readers commented:

My life. My choice.

Right to die, please.

Those concerned about care costs eating away their inheritances – and who do not wish to be ‘cared’ for – support assisted dying. It’s a win-win solution.

I would like the right to die when I become too incapacitated to lead the life that I want. Hopefully when I get to that stage it will be generally available as it is in some other continental countries.

Emma Duncan, editor of the1843 magazine and former deputy editor of The Economist, wrote today inThe Times: “Seeing my mother spend her final years longing for death has convinced me the law on assisted suicide must change”

“My brave mother, who could meet pretty much any challenge with her head held high, was brought low in the end. As her spirit faded, the one thing that still got her going was the law on assisted suicide. It infuriated her. She could not see why she should be kept alive, unwillingly and at great expense. She asked me several times to put a pillow over her head or take her to Dignitas, but I pointed out that I could be charged with assisting her suicide, and it would be tiresome for my children if I were jailed, so she gave up. But she never stopped complaining about the law, or sending money to Dignity in Dying, in an attempt to get it changed.

“To honour her spirit, I shall be taking up the cause she espoused

“Her case, which she continued to put cogently to the end of her days, was twofold. The first argument was about freedom of choice. Our laws are, by and large, governed by the notion that people should do what they want so long as it doesn’t hurt anybody else. My mother wanted to die, but suicide is impossible for the old and frail, though for a while she tried starving herself to death. Why, so long as she was settled in her mind — something which an application to a judge, with a lapse of time between request and confirmation, could establish — would the state not make it easy for her to do what she wanted to do?

“The second point was about cost. She thought it a horrible waste that hundreds of thousands of pounds were being spent on keeping her alive when they might have funded better education for people starting out on their lives. And it was going to get worse as society aged. “Think of the waste!” she would say. “It’s simply ghastly!”

“When I would point out that changing the law might cause some suffering, of old people bullied into suicide by greedy relatives, for instance, she countered that Switzerland and the Netherlands, with liberal regimes, report no such problems”.

Emma’s mother believed that the balance would shift heavily in favour of a law liberal enough to let even those without terminal diseases end their lives.

Emma ended: “We will be cremating my mother’s body tomorrow, but to honour her spirit I shall take up the cause that she espoused. I believe, as she did, that change will come. And the sooner it comes, the better it will be for brave people who want to take control of their death rather than be vanquished by old age”.

The FT reports that senior executives at several of the largest US banks have privately told the Trump administration they feared the prospect of a Labour victory if Britain were forced into new elections.

It then referred to a report by analysts at Morgan Stanley arguing that a Corbyn government would mark the “most significant political shift in the UK” since Margaret Thatcher’s election and may represent a “bigger risk than Brexit” to the British economy. It predicted snap elections next year, arguing that the prospect of a return to the polls “is much more scary from an equity perspective than Brexit”.

Jeremy Corbyn gave ‘a clear response’ to Morgan Stanley in a video (left) published on social media reflecting anti-Wall Street rhetoric from some mainstream politicians in the US and Europe, saying: “These are the same speculators and gamblers who crashed our economy in 2008 . . . could anyone refute the headline claim that bankers are indeed glorified gamblers playing with the fate of our nation?”

He warned global banks that operate out of the City of London that he would indeed be a “threat” to their business if he became prime minister.

He singled out Morgan Stanley, the US investment bank, for particular criticism, arguing that James Gorman, its chief executive, was paying himself a salary of millions of pounds as ordinary British workers are “finding it harder to get by”.

Corbyn blamed the “greed” of the big banks and said the financial crisis they caused had led to a “crisis” in the public services: “because the Tories used the aftermath of the financial crisis to push through unnecessary and deeply damaging austerity”.

The FT points out that donors linked to Morgan Stanley had given £350,000 to the Tory party since 2006 and Philip Hammond, the chancellor, had met the bank four times, most recently in April 2017. The bank also had strong ties to New Labour: “Alistair Darling, a Labour chancellor until 2010, has served on the bank’s board since 2015. Jeremy Heywood, head of Britain’s civil service, was a managing director at Morgan Stanley, including as co-head of UK investment banking, before returning to public service in 2007”.

A step forward?

In a December article the FT pointed out that the UK lacks the kind of community banks or Sparkassen that are the bedrock of small business lending in many other countries adding: “When Labour’s John McDonnell, the shadow chancellor, calls for a network of regional banks, he is calling attention to a real issue”. And an FT reader commented, “The single most important ethos change required is this: publish everyone’s tax returns”:

In Norway, you can walk into your local library or central council office and see how much tax your boss paid, how much tax your councillor paid, how much tax your politician paid.

This means major tax avoidance, complex schemes, major offshoring, etc, is almost impossible, because it combines morality and social morals with ethics and taxation.

We need to minimise this offshoring and tax avoidance; but the people in control of the information media flow, plus the politicians, rely on exactly these methods to increase their cash reserves.

But first give hope to many by electing a truly social democratic party.

The Financial Times’ Philip Stephens focusses on what he calls ‘populism’. He deplores the ‘electoral insurgency’ of the past few years leading to far-left and far-right parties winning significant vote shares across Europe.

After highlighting the failures and inconsistencies of the Trump government and the Brexit negotiations he warns the ‘hardliners’ in Mrs May’s cabinet that their choice is between:

swallowing a softer version of Brexit

or breaking with the prime minister

so risking a general election and a victory for Jeremy Corbyn’s Labour Party.

Adding “It is just possible that Brexit may prove too difficult to actually happen”

Last year Business Insider reported that the former head of the British civil service, Gus O’Donnell, told an LSE event that politicians need to focus on voters’ feelings of wellbeing to counter the rise of populism and win elections.

His Times colleague, Gideon Rachman adds: “The belief that the economic system is unjust has stoked the rise of rightwing and leftwing populism across the west”.

He continued by saying that until the shocks of 2008, centrist politicians in the west were able to offer a morally coherent view of the economy: a free-market economy would reward effort and spread opportunity. The creation of the global market system was reducing inequality and poverty across the world.

After the financial crisis, however, the “globalists” (to use a Trumpian term) began to lose the moral arguments and – Rachman continued – thefact that banks were bailed out as living standards stagnated, offended many voters’ idea of natural justice.

Stephens’ advice: centrist parties will win back support only when they separate populist leaders from their supporters — when they recognise that those voting for extremists are not by and large the “deplorables” described by Hillary Clinton and – belatedly – he admits those voters have real grievances — economic, social and cultural and offers a strategy to win back their lost support:

“Map an alternative route for society’s left-behinds”, not to do them justice, but because it is expedient:

Long-discarded notions should be disinterred:

progressive taxation,

active competition policy

and social equity

He ended lamely by asking: “And what, after all, was actually wrong with the social market economy?”